Crypto Regulation News: Trump Administration To Release New Fincen Requirements For Cryptos, Mnuchin Tells Congress; New Jersey Lawmaker Files Bill To Require Licenses For Crypto Companies; FINMA Wants To Bring Stricter AML Rules For Crypto Transactions; Sweden Begins Testing World’s First Digital Currency for Everyday Banking
9th February — 23rd February
Interesting
- The IRS Is Hosting A Tax Summit For Crypto Firms In March
- Treasury Secretary Mnuchin Says US Government Will Roll Out ‘Significant New Requirements’ on Bitcoin and Cryptocurrency
- US Treasury Could Have More Oversight Over Crypto If Trump’s Budget Proposal Goes Through
- US Agencies Seek Millions In New Funding To Bolster Crypto Efforts, Budget Documents Show
- SEC Urges Listed Firms To Factor Coronavirus Risks In Their Financial Disclosures
- A Q&A With The SEC’s Hester Peirce On Token Safe Harbors And What’s Next For Her Crypto Proposal on The Block
- Silicon Valley-based Attorney Gabriel Shapiro Responds to SEC Commissioner Hester Peirce’s Token Safe Harbor Proposal
- New Jersey Democrat Sponsors ‘Digital Asset and Blockchain Technology Act’ to Regulate Bitcoin and Crypto
- Crypto-Friendly Presidential Candidate Andrew Yang Considering a Mayoral Run?
- Michael Bloomberg Surges in US Presidential Race, Proposes Bitcoin and Cryptocurrency Guardrails, Centralized Database for Financial Transactions
- FinCEN: Social Media Crypto Projects Can’t Ignore Money Laundering Risk
- Blockchain Startup Enigma Settles With SEC Over Its $45 Million ICO
- Swiss Regulator FINMA Wants To Bring Stricter AML Rules For Crypto Transactions
- Cash-Free Sweden Begins Testing World’s First Digital Currency for Everyday Banking
- Crypto Startup Filing to Become ‘First Digital Assets Merchant Bank’ in the UK
- Japan Eyes Digital Yen to Modernize Financial Infrastructure As It Faces a Shrinking and Aging Population
- New Canadian Dollar-Pegged Stablecoin QCAD to be Regulated by FinTRAC
- Israeli Banks Should Not Deny Services to Crypto Firms: Attorney General
Opinions
A Q&A With The SEC’s Hester Peirce On Token Safe Harbors And What’s Next For Her Crypto Proposal on The Block:
Commissioner Hester Peirce of the U.S. Securities Exchange Commission proposed a safe harbor rule for crypto startups earlier this month
Peirce has made space for public comment and has received a range of feedback, which she said she hopes to synthesize into a revision
The proposal is specifically designed for projects that are further along and have a clear vision to safeguard against inciting another ICO craze, according to Peirce.
Treasury Secretary Mnuchin Says US Government Will Roll Out ‘Significant New Requirements’ on Bitcoin and Cryptocurrency: Speaking before the Senate Finance Committee last Wednesday, U.S. Treasury Secretary Steven Mnuchin told Congress that new requirements for cryptocurrencies are underway.
Mnuchin, a long-time skeptic of Bitcoin and crypto, says the U.S. Financial Crimes Enforcement Network (FinCEN) will roll out significant new requirements to ensure that the technology moves forward in the right direction.
Says Mnuchin,
“Specifically on cryptocurrencies, we are spending a lot of time on this, on both an inter-agency basis and with the regulators.
We are about to roll out some significant new requirements at FinCEN. We want to make sure that technology moves forward. On the other hand, we want to make sure cryptocurrencies aren’t used for the equivalent of old Swiss secret number bank accounts.”
Fed Chair Jay Powell: ‘Libra Lit a Fire,’ All Eyes on Central Bank Digital Currencies: Chairman Jay Powell is crediting Facebook’s proposed currency Libra for prompting the Federal Reserve to take a closer look at digital assets.
Speaking before the U.S. House Financial Services Committee, Powell confirms that central banks around the world are exploring the possibility of creating digital versions of fiat currencies.
“Every major central bank is currently taking a deep look at that. We feel that’s our obligation, technology has now made that possible…
Having a single government currency at the heart of the financial system is something that has served us well. It’s a very, very basic thing. It really hasn’t been in question, and I think before we move away from that, we should really understand what we’re doing.”
Libra and Facebook came under fire from Powell and other policymakers last year, when they expressed concerned about the tech giant’s track record on data privacy and the financial impact of a stablecoin that has the power to reach a built-in user base of billions.
“Frankly, Libra really lit a fire and was a bit of a wake-up call that this is coming fast and could come in a way that is quite widespread and systematically important — fairly quickly, if you use one of these big tech networks like Libra did.”
Powell reiterates that the organization is merely examining the possibility of creating a digital asset and nothing is set in stone.
“We fully appreciate the importance of making quick progress — we have not decided to do this, though. There are many questions that need to be answered around digital currency for the United States, including cyber issues, privacy issues. Many operational alternatives present themselves, so we’re going to be working through all of that.”
As for Bitcoin and the crypto markets, Powell says he believes the US should continue to develop a robust regulatory system for the emerging assets.
FinCEN: Social Media Crypto Projects Can’t Ignore Money Laundering Risk: The deputy director of the United States Financial Crimes Enforcement Network (FinCEN) says the cryptocurrency sector must not abet a “slide backward” in money laundering prevention.
FinCEN deputy director Jamal El-Hindi made his remarks during a speech at the Securities Industry and Financial Markets Association 20th Anti-Money Laundering and Financial Crimes Conference in New York City on Feb. 6.
El-Hindi opened his speech noting the particular complexity of the securities and futures industry, which comprises a dense web of transactions and interactions between inter-related parties.
This “amazingly complex” landscape includes but is not limited to primary brokerages, futures commission merchants, executing dealers, transfer agents, clearing firms and mutual funds, he observed.
This complexity, he suggested, presents a challenge to the transparency — the information collection and due diligence processes — needed to tackle money laundering and prevent financial crimes.
In many cases, information sharing and Know Your Customer processes may be discouraged due to the highly competitive nature of the industry — just 14% of all entities in the securities sector that are eligible to register for one of the key business-to-business information sharing mechanisms choose to do so, he noted.
Within this highly challenging climate, El-Hindi warned that new technologies may further exacerbate the situation.
Cryptocurrency-curious social media and messaging platforms — the most high-profile of which is Facebook’s Libra project — must meet the same compliance responsibilities as traditional financial sector actors, he stressed:
“Social media and messaging platforms and others now focusing on the establishment of cryptocurrencies cannot turn a blind eye to illicit transactions that they may be fostering.”
‘All the Banks Are Broke’ Speech Goes Viral on Crypto Twitter: A passionate two-minute speech delivered by Godfrey Bloom, a member of the European Parliament from 2004 to 2014, is spreading through Crypto Twitter like wildfire. The 2013 speech is a shakedown on the global financial system.
During the presentation, Bloom declares that all the banks are broke. At that time, on May 21, 2013, Bitcoin was trading at $122 and remained a fringe asset among techies and cypherpunks.
It would take the remainder of the decade to transform BTC, now trading above $10,000, into the best-performing asset of the last 10 years, attracting legacy giants like Fidelity and Intercontinental Exchange that are putting their full weight behind blockchain-based infrastructure.
During that same period, numerous banks, including Deutsche Bank and Danske bank, have been embroiled in multi-billion-dollar money laundering scandals and consumer fraud.
Wells Fargo, after the collapse of a scheme to create bogus customer accounts, is now restructuring its business and investing in crypto innovation. Negative interest rates, quantitative easing, ballooning deficits and multi-trillion-dollar government budget proposals remain the cornerstones of monetary policy against deflationary fiat currencies.
Bloom remarked,
“All the banks are broke. Bank Santander, Deutsche Bank, Royal Bank of Scotland… they’re all broke. And why are they broke? It isn’t an act of god. It isn’t some sort of tsunami. They’re broke because we have a system called fractional reserve banking. Which means that banks can lend money that they don’t actually have. It’s a criminal scandal, and its been going on for too long.
To add to that problem, you have moral hazard, a very significant moral hazard from the political sphere. Most of the problems start in politics and central banks, which are part of the same political system.
We have counterfeiting, sometimes called ‘quantitative easing,’ but counterfeiting by any other name — the artificial printing of money, which, if any ordinary person did, they’d go to prison for a very long time. And yet governments and central banks do it all the time.”
An Open Letter To SEC Commissioner Peirce On Token Safe Harbors by Gabriel Shapiro, a Silicon-Valley-based attorney specializing in complex corporate and blockchain-based transactions.
Crypto Expert Explains to Mainstream America Why Digital US Dollars Trump Cash in the New Economy: In the analog world, paper money reigned supreme, powering consumer transactions — from big ticket items to bread — as well as every conceivable industry, government and small-to-medium size business. But optimizing for the digital economy requires a distinctly different type of currency — one that is free of intermediaries, secure and capable of crossing borders instantly and on-the-go, argues the former chairman of the US Commodity Futures Trading Commission.
In an interview with Yahoo Finance, Christopher Giancarlo, also known as ‘Crypto Dad’ for ushering in the first Bitcoin futures products during his tenure as head of the CFTC, comments on the upside of digitization, explains why it’s a logical next step for money and why modern society needs the online marketplace digital equivalent of being able to fork over paper money at the local drugstore.
Says Giancarlo,
“In the analog human world when you go to the corner drugstore to buy a package of candies, you use dollar bills, and you’ll exchange it, and you’ll pass a dollar over. The recipient will have a dollar, know they’ve got a dollar — you’re out a dollar — but there’s no intermediaries involved.
But when you shop online, you engage in retail commerce in the new digital world, which is online. You can’t use fiat currency. You can’t exchange a dollar, ten dollars, a hundred dollars. You need a credit card. You need an intermediary to vouch for your identity, for your credit worthiness, for their credit worthiness. And each of those intermediaries’ steps takes a percentage out of the transaction. They also mine your data. They also collect information.
When we talk about a digital dollar, we’re talking about, in the virtual world, to have that same immediacy of payment that we have in the analog human world.”
Coronavirus Cash Quarantine Comes to China in Attempt to Sterilize Fiat Currency: Fan Yifei, deputy governor of the People’s Bank of China, revealed at a press conference last Saturday that China is now quarantining old bank notes in order to contain the spread of the coronavirus.
Yifei says money in worst-hit areas will be sanitized with heat and ultraviolet rays, and quarantined for two weeks before being distributed again. Money in less risky areas will also be locked up, but only for a week. He adds that commercial lenders were also asked to quarantine cash from hospitals and food markets.
Data from the Johns Hopkins real-time tracker shows that as of Sunday, global cases of the coronavirus have reached 69,183, including 1,669 deaths with 9,521 recoveries.
As part of the measures to reduce further spread of the virus, China’s central bank is funneling 600 billion yuan ($85.9 billion) in new cash for Hubei, the center of the epidemic, with the provincial capital, Wuhan, receiving 4 billion yuan ($572 million) new banknotes.
USA
The IRS Is Hosting A Tax Summit For Crypto Firms In March: The IRS is reportedly hosting a summit in a bid to open up dialogue on tax-related issues around cryptocurrencies.
The agency has invited cryptocurrency companies and advocates to the summit, scheduled to take place on March 3 at the IRS’ Washington D.C. headquarter, according to reports from Bloomberg Tax and CoinDesk. A representative for the agency confirmed the event when reached after publication.
The summit will feature four 90-minute panels touching on technology updates, taxation issues facing cryptocurrency exchanges, tax return preparations, and regulatory compliance.
“[Panelists] will share their views and engage with the audience, which will include IRS personnel from across the spectrum of tax administration, and individuals from other bureaus or offices within the Department of Treasury,” Bloomberg reported.
The summit comes amid the IRS’s toughened stance on cryptocurrency tax evasion. In 2019, the agency sent out thousands of letters to cryptocurrency holders who allegedly failed to report their earnings.
This year’s 1040 form also includes, for the first time, a question on taxpayers’ cryptocurrency activities.
The SEC Would Still Be Watching Under Peirce’s Safe Harbor Proposal — And They’d Know Where To Look:
· EC Commissioner Hester Peirce introduced a proposed rule that would give token projects safe harbor for three years, allowing them time to sufficiently decentralize their networks
· The application for safe harbor would require a variety of disclosures, putting the details of many projects on the SEC’s radar
· Though it’s only in proposal form, Peirce’s announcement is already making waves in the ecosystem.
SEC Urges Listed Firms To Factor Coronavirus Risks In Their Financial Disclosures: The U.S. Securities and Exchange Commission has urged listed companies in the country to factor coronavirus risks in their financial reporting disclosures.
The SEC said last Wednesday that companies may have “significant” operations in China and other jurisdictions that may be affected by the coronavirus or may have their suppliers, distributors and/or customers in those regions.
While actual effects may be difficult to assess, the SEC said companies should work with their auditors to ensure that their financial reporting and auditing processes are “as robust as practicable in light of the circumstances in meeting the applicable requirements.”
Last month, SEC Chairman Jay Clayton said he had directed staff to start monitoring companies’ disclosures related to the “current and potential effects” of the coronavirus on their businesses.
“This is an uncertain issue where actual effects will depend on many factors beyond the control and knowledge of issuers. However, how issuers plan for that uncertainty and how they choose to respond to events as they unfold can nevertheless be material to an investment decision,” Clayton said at the time.
Over 2,000 people have died from the coronavirus outbreak as of Feb. 20, according to Worldometer, while over 75,000 cases have been confirmed in 30 countries and territories.
US Treasury Could Have More Oversight Over Crypto If Trump’s Budget Proposal Goes Through: The U.S. Department of the Treasury could have more supervision powers over the crypto space if President Donald Trump’s budget proposal for the fiscal year 2021 goes through.
Released last Monday, the $4.8 trillion budget, seeks to move the U.S. Secret Service back to the Treasury to fight crypto-related crimes such as money laundering and terrorist financing. The Secret Service, established in 1865 within the Treasury to protect presidents and combat currency counterfeiting, was transferred to the Department of Homeland Security in 2003.
“Technological advancements in recent decades, such as cryptocurrencies and the increasing interconnectedness of the international financial marketplace, have resulted in more complex criminal organizations and revealed stronger links between financial and electronic crimes and the financing of terrorists and rogue state actors. The Budget proposes legislation to return the U.S. Secret Service to Treasury to create new efficiencies in the investigation of these crimes and prepare the Nation to face the threats of tomorrow,” the proposal reads.
The proposal, however, is reportedly unlikely to get through Congress — but reveals the Trump administration’s policy priorities.
The budget “prioritizes Treasury’s role in fostering a strong economy in the United States, ensuring financial stability abroad, strengthening national security, and effectively managing the taxpayer resources,” said Treasury Secretary Steven Mnuchin in a separate statement published last Monday.
Mnuchin has been vocal about rooting out bad actors in the crypto space. He once said: “We don’t want bad actors using cryptocurrency. That’s our number one issue,” adding that it is a “national security issue.”
He also said that “very, very strong” regulations are needed to ensure bitcoin and cryptocurrencies don’t become like anonymous Swiss bank accounts, “which were obviously a risk to the financial system.”
U.S. Agencies Seek Millions In New Funding To Bolster Crypto Efforts, Budget Documents Show: Federal agencies within the U.S. Department of Justice and the Treasury Department are seeking millions of dollars in additional funding for FY 2021 to support their cryptocurrency oversight and enforcement efforts, a review of public budget documents shows.
The Trump administration unveiled its $4.8 trillion budget plan last Monday. As CoinDesk reported at the time, the budget summary notably focused on a plan to move the U.S. Secret Service from the Department of Homeland Security to the Treasury Department, its original home.
“Technological advancements in recent decades, such as cryptocurrencies and the increasing interconnectedness of the international financial marketplace, have resulted in more complex criminal organizations and revealed stronger links between financial and electronic crimes and the financing of terrorists and rogue state actors,” the summary document states.
A closer look reveals that major agencies within Treasury are seeking Congressional funds to beef up their existing crypto efforts. FY 2021 begins on October 1, 2020.
Unsurprisingly, among those agencies in the Internal Revenue Service (IRS). According to its FY 2021 documentation, wants $40.54 million to “Expand Cyber and Virtual Currency Compliance Efforts.”
“This additional funding would support the hiring of 108 special agents to conduct more criminal investigations related to cyber and virtual currency,” the agency wrote, explaining:
“As a result, about 450 additional criminal investigations are projected to be completed from FY 2023 — FY 2025 once the new hires reach full potential. Additionally, CI estimates that as a result of the additional special agents, CI will identify $197.3 million annually in tax revenues either not reported to the IRS or fraudulently refunded by the IRS.”
The Office of Foreign Assets Control (OFAC), according to documentation for the Office of Terrorism and Financial Intelligence (under which it operates), is seeking four full-time employees and an additional $812,000 to hire “virtual currency investigators.”
As the budget document outlines:
“Presently, OFAC has a single investigator focused on the illicit use of virtual currency, and this investigator is often pulled away from purely investigative duties in order to share virtual currency expertise across [Terrorism and Financial Intelligence], since this area is of high concern but also an uncommon area of technical competency. Meanwhile, investigators across most sanctions programs are reporting increasing exposure to the use of virtual currencies by the targets of their investigations. Additional virtual currency investigators will allow investigations involving cryptocurrency across all of OFAC’s sanctions programs to be able to exploit this investigative arena.”
The Financial Crimes Enforcement Network (FinCEN), according to budget documents, is seeking $819,000 and three full-time employees to support “Building Out FinCEN’s Virtual Currency and Cyber Threat Mitigation Program.”
As FinCEN explained:
“These funds will allow for international capacity building to ensure that accessibility of critical information exists for investigations that include an international component. The utilization of software tools will allow FinCEN to double the number of virtual currencies analyses, corroborate findings, and increase big data analytics capability, allowing for automated analytics and visualization of financial and cyber data. The program enhancement strengthens direct support for law enforcement cases to 130 cases per year, the development of 37 strategic intelligence products, and the provision of 50 training sessions per year.”
U.S. Treasury Secretary Steven Mnuchin told a U.S. Senate committee last Wednesday that FinCEN is gearing up to release new requirements related to cryptocurrencies, although what shape such a move will take remains to be seen.
New Jersey Lawmaker Files Bill To Require Licenses For Crypto Companies: A lawmaker New Jersey has introduced a new bill that, if passed and signed into law, would mandate that cryptocurrency businesses must obtain a license to operate in the state.
The new bill — the “Digital Asset and Blockchain Technology Act” — aims to strengthen consumer protection laws in the cryptocurrency space, according to an official announcement. The measure was introduced on Feb. 20, according to data published on LegiScan.
The legislation states that such firms would have to obtain approval from the New Jersey Department of Banking and Insurance or another state that has agreements with the New Jersey government.
To apply for the license, firms would have to disclose their legal names, their fictitious or trade names, their licensing and legal history, as well as their anti-money laundering and anti-terrorist financing policies.
Since the bill aims to shore up consumer protection, crypto companies would also have to release the terms and conditions for their consumer accounts, including a schedule of fees, their compliance status with the Federal Deposit Insurance Cooperation, and information on potential market risks.
“Throughout New Jersey, there are ATMs that dispense Bitcoins. People see and hear about it in their day to day lives, but most are not quite sure what it is,” Assemblywoman Yvonne Lopez, the bill’s prime sponsor, said in a statement. “We must take steps to protect consumers looking to invest in cryptocurrency, while also allowing the sector to continue to develop and expand in New Jersey.”
Crypto-Friendly Presidential Candidate Andrew Yang Considering a Mayoral Run?: “See you back in New York,” Andrew Yang said as he ended his campaign for US president.
Cryptocurrency holders saw an ally in 2020 presidential hopeful Andrew Yang, so the news that he was suspending his campaign on Feb. 11 came as a major disappointment. As one of the outspoken candidates on blockchain and crypto, Yang outlined his plans for the cryptocurrency industry and discussed implementing blockchain-based mobile voting for the upcoming election. One of the political action committees (PAC) supporting Yang even allowed donations in Bitcoin.
Yang’s progressive ideas when it came to universal basic income drove his campaign out of obscurity and into the national spotlight in 2019. Yet he was unable to match the support of candidates like Senators Elizabeth Warren and Bernie Sanders in the Iowa caucus and New Hampshire primary to continue his presidential run. Despite these setbacks, the entrepreneur alluded to getting involved in local elections upon his return to New York City:
“I would certainly not rule out running for office again.”
Michael Bloomberg Surges in US Presidential Race, Proposes Bitcoin and Cryptocurrency Guardrails, Centralized Database for Financial Transactions: Michael Bloomberg’s 2020 US presidential candidacy is looking up. Way up. The former New York mayor just qualified for his first Democratic presidential debate. With 19% support nationally, according to the latest NPR/PBS NewsHour/Marist poll, Bloomberg trails only Bernie Sanders who has garnered 31% support.
The billionaire media mogul and majority owner of Bloomberg L.P., a late entrant to the US presidential race, will join the debate stage on Wednesday, February 19 in Las Vegas, Nevada, putting his newly released financial reform plan front and center.
Bloomberg’s plan calls for a centralized record of all financial transactions in an effort to restore “protections and safeguards” that he says were put into place after the 2008 financial crisis and then stripped away by President Donald Trump.
Bloomberg says he can undo the damage through centralization and a clear regulatory framework for Bitcoin (BTC) and cryptocurrency — the new asset class designed to resist centralization.
According to Bloomberg’s plan,
“Mike will improve America’s ability to anticipate and prevent future crises by restoring funding to the Office of Financial Research, requiring large financial institutions to monitor their risk exposure, and creating a centralized record of all transactions in the markets.”
The plan focuses heavily on consumer protections and targets fairness in payday lending, auto lending, credit reporting, access to credit, banking services and financial opportunities.
Despite centralization running counter to the ethos of decentralized cryptocurrencies such as Bitcoin and Ethereum, Bloomberg says he’ll support fintech innovation by establishing a safe environment for entrepreneurs and a regulatory framework for cryptocurrencies.
“Finally, Mike will promote healthy competition in financial services by creating a ‘regulatory sandbox’ where startups can test concepts, and by providing a clear regulatory framework for cryptocurrencies.”
While leaders in the crypto community are attempting to tackle poverty by opening up financial services for the world’s underserved and by removing intermediaries, reducing high fees and using technology and automated smart contracts to streamline business processes, Bloomberg’s approach is bureaucratic. He’ll impose a new tax.
According to his plan,
“Mike will also introduce a tax of 0.1% on all financial transactions to raise revenue needed to address wealth inequality, and support other measures — such as a speed limit on trading — to curb predatory behavior and reduce the risk of destabilizing ‘flash crashes.’”
You can check out Bloomberg’s full financial reform plan here.
Blockchain Startup Enigma Settles With SEC Over Its $45 Million ICO: Blockchain startup Enigma has reached a settlement with the U.S. Securities and Exchange Commission over the initial coin offering it conducted in 2017.
The startup, based in the U.S. and Israel, raised about $45 million during an initial coin offering of its ENG Tokens in the summer and fall of 2017, according to a statement released last Wednesday by the SEC.
The goal of the fundraising, Enigma claimed at the time, was to build a digital asset trade-testing platform and a marketplace for data.
However, regulators at the SEC ultimately determined that the ENG token should be classified as a security and went on to allege that Enigma conducted an unregistered offering of securities.
Enigma “consented to the order without admitting or denying its findings,” the statement said. Enigma also accepted a $500,000 penalty and agreed to a claims process that lets investors who participated in the ICO reclaim their funds. Moreover, Enigma will register its tokens as securities and will periodically report to the SEC.
“All investors are entitled to receive certain information from issuers in connection with a securities offering, whether it involves more traditional assets or novel ones,” said John T. Dugan, Associate Director for Enforcement in the SEC’s Boston Regional Office. “The remedies in today’s order provide ICO investors with an opportunity to obtain compensation and provide investors with the information to which they are entitled as they make investment decisions.”
Enigma further announced Wednesday that its mainnet has been launched, with more than 20 validators currently operating on the network.
“This settlement, which is the culmination of an extended series of discussions with the SEC, clears the way for our development team to return its full attention and energy to our original and continued vision: building groundbreaking privacy solutions that improve the adoption and usability of decentralized technologies, for the benefit of all,” Enigma said in a statement. “With the settlement behind us, we can again push forward and meaningfully advance the Enigma protocol — as evidenced by today’s news of the successful launch of the first Enigma mainnet.”
U.S. Government Charges U.S. Businessman For Allegedly Defrauding Physicians Through Crypto Investment Scheme: The U.S. Securities and Exchange Commission said last Tuesday that it has filed charges against an Ohio-based businessman for allegedly defrauding dozens of investors through a cryptocurrency investment scheme.
The U.S. securities regulator said in a statement that “Michael W. Ackerman, along with two business partners, raised at least $33 million by claiming to investors that he had developed a proprietary algorithm that allowed him to generate extraordinary profits while trading in cryptocurrencies.” Ackerman was formally accused of antifraud violations of U.S. securities law, according to the statement.
The Commodity Futures Trading Commission and the U.S. Attorney’s Office for the Southern District of New York also announced charges against Ackerman, according to a statement. Ackerman was arrested, per the statement.
Notably, the alleged scheme targeted “physicians in particular [who] made investments in two entities, Q3 Trading Club and Q3 I LP, when they were introduced to the digital currency investment opportunity by one of the business partners who also is a physician.”
All told, according to the SEC, “approximately 150 investors” were allegedly targeted.
“As alleged in our complaint, Ackerman lured investors, many in the medical profession, into falsely believing that he generated extraordinary profits from his algorithmic trading strategy,” Eric I. Bustillo, the SEC’s Miami Regional Office director, said in a statement. “Ackerman exploited popular interest in digital assets as a means to obtain millions of dollars for his personal use.”
According to the official complaint, the SEC is seeking disgorgement of gains as well as civil penalties against Ackerman.
$1,700,000,000 in Bitcoin Profits Squandered by US Government: Over the past six years, the US government lost approximately $1.7 billion by selling seized Bitcoin that was linked to illegal activities, according to data from the US Marshals Bitcoin Auction real-time tracker.
The tracker, created by the chief technology officer at crypto startup Casa, Jameson Lopp, calculates the amount of money lost each time the United States Marshals Service rushed to auction off Bitcoin that was confiscated during criminal investigations.
It shows that from June 2014 to January 2020, the USMS sold 185,230 Bitcoin for a profit of $151 million. Its most recent auction placed
That same amount of Bitcoin is now worth $1.9 billion, which means the US gave up gains of $1.7 billion by selling early.
The seized Bitcoin were sold at an average of $818 apiece. The current value of the cryptocurrency now hovers at $10,000.
Europe
Swiss Regulator FINMA Wants To Bring Stricter AML Rules For Crypto Transactions: The Swiss Financial Market Supervisory Authority (FINMA) has suggested a plan to bring stricter anti-money laundering (AML) rules for crypto transactions.
Per a proposal announced last Friday, crypto transactions of over 1,000 Swiss francs (~$1,025) will require client identification as opposed to the current limit of 5,000 francs (~$5,120). FINMA said the new limit has been considered due to “heightened” money-laundering risks in the crypto space.
The proposal will also bring the new threshold in line with the “international standards” approved in mid-2019, said FINMA, indicating the Financial Action Task Force’s (FATF) directive from last June.
FATF, an international money-laundering watchdog, approved a maximum transaction limit of $1,000 for unidentified crypto transactions. It means crypto firms, including exchanges, are required to collect client information of those initiating transactions of over $1,000, as well as details about recipients of those funds.
FINMA will hold a public consultation on the new limit proposal until April 9, 2020, per the announcement.
Last month, the European Union also implemented its Fifth Anti Money Laundering Directive (AMLD5), which requires crypto firms and exchanges to follow enhanced know-your-customer (KYC) programs and reporting obligations.
Cash-Free Sweden Begins Testing World’s First Digital Currency for Everyday Banking: Sweden is attempting to work out the technical challenges of issuing a central bank backed digital currency for everyday banking activities. Riksbank announced on Wednesday that it is currently testing its e-krona. Although no launch date has been set, its release would make it the world’s first central bank digital currency (CBDC).
The e-krona is designed for everyday banking activities. Consumers would interface with the new digital currency through several methods: a mobile app, wearable tech, such as smart watches, and cards. The digital krona would allow people to make deposits, withdrawals and payments on the go.
According to the central bank’s official statement, the purpose of the pilot is for Riksbank to increase its knowledge of how a central bank-issued digital krona that utilizes digital ledger technology, aka blockchain, would operate and function in the general public.
“The technical solution will be evaluated in a test environment, in which participants, for example the general public and banks, are simulated.
There is currently no decision on issuing an e-krona, how an e-krona might be designed or what technology might be used. The main purpose of the pilot is for the Riksbank to increase its knowledge of a central bank digital krona.”
While the e-krona is being promoted as a complement to cash, and not a cash replacement, the Swedes have turned the country into the most cashless society in the world.
Riksbank says cash is in constant decline with transactions using banknotes shrinking to 13% in 2018.
“Swedes pay less and less frequently in cash and more and more shops and restaurants are no longer accepting it. The trend in Sweden differs from that in other countries. It means that some groups are finding it increasingly difficult to pay.”
Groups that are at a disadvantage include the elderly and people who are less tech-savvy or averse to smartphones.
Riksbank says that the payment market in Sweden is being digitalized.
“It’s more common to pay by mobile phone app (Swish). Payments in the form of instant account-to-account transfers are increasing sharply. For this type of payment to be able to continue to grow, the infrastructure for payments needs to be modernized. Swish is the most common form of instant payment in Sweden.”
The e-krona pilot is slated to run through February of 2021.
Crypto Startup Filing to Become ‘First Digital Assets Merchant Bank’ in the UK: London-based startup DAG Global is applying for a UK banking license in order to become the “first digital assets merchant bank” in the UK.
Following “constructive dialog” with regulators, the fintech firm, which specializes in digital assets, is now resubmitting an application originally filed in 2019. If approved, the company would be able to serve crypto firms with merchant banking solutions, effectively bridging the divide between digital asset services and traditional banks, according to a report by the Financial Times.
As the digital economy expands along with the rise of Bitcoin, stablecoins and other digital assets that are leveraging speed, low-cost value transfers and the ability to trade 24/7 across borders, new tech-driven businesses integrating token economics are looking for hybrid platforms that can facilitate transactions between digital systems and the legacy structure.
Ideal banking partners would remove concerns about having accounts shut down or otherwise limited due to restrictions placed on “high risk” transactions involving cryptocurrencies — eliminating scenarios that have stifled innovation in countries such as India where the Reserve Bank of India issued a mandate in 2018 that prohibited banks from servicing crypto-related businesses.
DAG Global confirms on its website that a full UK banking license would allow it to offer blockchain and crypto entrepreneurs a full suite of services, including digital assets lending and over-the-counter trading, removing the gap between fiat currencies and digital assets.
“Our robust, industry-leading digital banking platform is being built using advanced and robust technologies, which enables us to facilitate cost-effective transactions within and across traditional fiat currency and digital assets — all to the highest globally-established standards of compliance and security.”
The firm joins a number of companies that are exploring how to offer services for both crypto and fiat currencies under one roof.
Asia
Japan Eyes Digital Yen to Modernize Financial Infrastructure As It Faces a Shrinking and Aging Population: A senior Japanese lawmaker is urging the government to create its own digital yen.
In the wake of China’s plans to launch a digital yuan and Facebook’s efforts to release Libra, a stablecoin that could reach a user base of over 2.5 billion, Kozo Yamamoto, head of the banking and finance systems research commission at Japan’s Liberal Democratic Party, will work with former economy minister Akira Amari to push for a digital currency, reports Reuters.
Yamamoto, one of the chief architects of Prime Minister Shinzo Abe’s “Abenomics” which is based on the principles of monetary easing, fiscal stimulus and structural reforms, argues that the spread of digital currencies can help stabilize emerging markets that heavily rely on the US dollar.
Says Yamamoto,
“If each country manages to control flows of money with their own (digital) currencies, that could prevent a big swing at a time of crisis and stabilize their own economy.”
Lawmakers pushing for a digital currency think a digital yen can keep Japan abreast of global changes in financial technology.
The International Monetary Fund (IMF) is recommending that Japan adopt economic policy reforms to safeguard its financial stability, as the country faces a declining and aging population along with a shrinking tax base.
Rest of the World
New Canadian Dollar-Pegged Stablecoin QCAD to be Regulated by FinTRAC: Major Canadian investment fund manager 3iQ and blockchain firm Mavennet co-launched a new regulated stablecoin pegged to the Canadian dollar (CAD).
Developed by Canada Stablecorp, a joint venture between 3iQ and Mavennet, QCAD is the latest CAD-based stablecoin and was officially launched on Feb. 11.
Based on the Ethereum blockchain, QCAD implements popular token standard ERC-20 and is targeting the mass market.
While QCAD is not yet listed on major websites tracking crypto market capitalization like Coin360, QCAD transactions can be now tracked via Ethereum blockchain explorer Etherscan. According to Etherscan, QCAD is held by 5 addresses with a total supply of 150,350 CAD ($113,000) as of press time.
Following the launch, Canadians can immediately trade QCAD against major cryptocurrencies like Bitcoin (BTC), Ether (ETH) as well as USD Coin (USDC), a USD-pegged stablecoin launched jointly by Coinbase and Circle.
According to the announcement, users can immediately buy QCAD directly via partners like DVeX, Newton, Bitvo, Netcoins and Coinsmart. According to Stablecorp, QCAD is fully supported by crypto custodians such as global crypto processor BitGo and local crypto custody service Balance.
In the future, the company plans to extend QCAD to more networks than Ethereum, the firm said. Stablecorp’s chief operating officer (COO) Rob Durscki wrote in an email to Cointelegraph:
“QCAD, by concept, is chain agnostic. Our main concern is user experience and security, and that’s what led us to start with Ethereum, due to its robust infrastructure and successful past and current projects. Nonetheless we plan on assessing additional networks, always focusing at our clients’ experience.”
Israeli Banks Should Not Deny Services to Crypto Firms: Attorney General: Israeli banks should not deny services to firms involved with cryptocurrencies, according to Israel’s attorney general Avichai Mandelblit.
Instead of halting financial services for all crypto firms, banks should closely examine each case for indicators of money laundering risks or other illicit financial practices, Mandelblit told the Tel Aviv District Court.
Mandelblit’s stance — reported by Israeli news agency Globes on Feb. 19. — is in opposition to the view of the country’s central bank, the Bank of Israel.
During 2019 a number of Israeli banks froze the accounts of customers receiving transfers derived from crypto. As reported by Cointelegraph, the action meant some Israeli Bitcoin (BTC) investors were unable to pay their taxes because banks would not accept their deposits.
In August 2019, an investor sued Israeli Bank Hapoalim for nearly $23 million, accusing it of refusing to accept deposits of profits earned through Bitcoin.
It’s a similar story in other parts of the world. The Internet and Mobile Association of India is currently fighting against the country’s central bank’s prohibitions against the provision of financial services to crypto firms.
Mandelblit’s position was filed in a case involving Mercantile Discount Bank’s refusal to authorize a transfer from local crypto exchange BIT2C. According to Globes, the AG’s stance was based on the recommendations of an inter-ministerial team headed by Erez Kaminitz, deputy attorney general at the Civil Law Department.
The team includes representatives from a number of state agencies and departments such as the Ministry of Justice, the Israel Money Laundering and Terror Financing Prohibition Authority, the Israel Capital Markets, Insurance, and Savings Authority, and others.
Despite the stance of Israeli banks, the government of Israel has been looking closely at blockchain technology. Last month the Israeli Securities Authority issued an information request to identify regulations that are preventing the development of blockchain-based ventures in the country.
